(1)
Interpretation of Sub-section(6) of Section (5) of the Andhra Pradesh
Entertainments Tax Act, 1939 in the facts and circumstances as obtaining herein
falls for our consideration in this appeal which arises out of a judgment and
order dated 6.1.2006 passed by a Division Bench of the Andhra Pradesh High
Court in Writ Petition No.20087 of 2005 allowing the writ petition filed by the
respondent herein.

(2)
The basic fact of the matter is not in dispute.

(3)
Respondent owns a cinema theatre. It is exigible to payment of entertainment
tax. Section 4 of the Andhra Pradesh Entertainment Tax Act provides for the
mode and manner for calculating the quantum of tax payable. Section (5) of the
said Act, however, provides for computation of tax on the basis of an option to
be exercised by the owner of the theatre subject to the conditions as may be
prescribed therefor. Indisputably, the State has made rules for calculation of
the tax in lieu of such an option exercised by the owner of the cinema theatre.
The scheme for exercise of such an option is that;

(i) a
proprietor shall file an application in the prescribed form before the
prescribed authority;

(ii)
the authority would pass an order upon giving an opportunity of hearing to the
owner of the theatre for correct determination of the amount and the nature of
security to be furnished by the proprietor for proper payment of tax and the
time within which such security to be furnished;

(iii) once
such security is furnished the Entertainment Tax Officer is required to grant a
permit in the prescribed form, namely, Form IV wherafter, the proprietor of the
cinema theatre is to pay tax in the manner indicated therein.

(4)
Sub-Section (6) of Section (5), however, entitles the prescribed authority to
vary the amount of tax payable if one or the other conditions contained therein
is satisfied.

(5) In
this case the respondent filed an application in the prescribed 'Form'
exercising an option under Section 5 of the Act. The cinema theatre in question
is situated within SerilingampallyMunicipality. It is now not in dispute that in terms of a Notification
dated 18.5.2001 the Municipality was upgraded to Grade II from Grade III.

(6)
Form IV was issued to the respondent on 25.5.2001. Although, the correct date
of the filing of the application is not available on records but the respondent
must have filed the said application prior to 18.5.2001.

(7) It
is possible that during assessment of tax proceedings in terms of the option
exercised by the respondent, the Entertainment Tax Officer was not aware of the
factum of upgradation of the Municipality in terms of the said Notification
dated 18.5.2001. The mistake was pointed out only by the Office of the
Accountant General. A show cause notice in terms of Sectin 5(6) of the Act was,
therefore, issued on the respondent on or about 24.6.2005.

(8)
The question which arose for consideration before the Appellant and,
consequently, before the High Court was as to whether in terms of Sub-section
(6) of Section (5) of the Act read with Sub-Rule 13 of Rule 27, the words
"during the period of option" referred to the power of the prescribed
authority to vary the amount of tax payable or only the amount of tax payable.

(9)
Respondent in support of its plea that an order of varying the quantum of tax
could be passed only during the currency of the period for which such tax is to
be paid submitted that the said words restrict the power of the assessing
authority to vary the amount of tax payable which would mean that on the expiry
of the said period, the power to vary the amount of tax also comes to an end.
Such a construction appears to have found favour by the Andhra Pradesh High
Court in Hyderabad (1992 Vol. 15 A.P. Sales Tax
Journal 63).

(10)
Having heard learned counsel for the parties, we are of the opinion that it is
not necessary for us to go into the aforementioned question. In the fact
situation obtaining herein, we are satisfied that attention of the assessing
authority might not have been drawn to the Notification dated 18.5.2001 in
terms whereof the Municipality was upgraded from Grade III to Grade II, a
mistake was committed in the matter of computation of tax. If a genuine mistake
has been committed not only by the assessing authority in the said matter and
furthermore as the respondent also did not bring the same to the notice of the
said authority, in our opinion, interest of justice would be subserved if the
said mistake be allowed to be rectified.

this
Court held:

"It
is now trite that if a mistake is committed in passing an administrative order,
the same may be rectified. Rectification of a mistake, however, may in a given
situation require compliance of the principles of natural justice. It is only
in a case where the mistake is apparent on the face of the records, a rectification
thereof is permissible without giving any hearing to the aggrieved party."

SCALE
363) , it was held:

"It
is not denied or disputed that even when a mistake is sought to be rectified,
if by reason thereof, an employee has to suffer civil consequences ordinarily
the principles of natural justice are required to be complied with..."

It was
further held:

"If
a mistake is to be rectified the same should be done as expeditiously as 12 SCC
408) Tribunal IV and Ors. - 1994 5 SCC 180, an order passed by way of a mistake
was permitted to be corrected as the same was done in violation of the order of
injunction.

In
such a situation only, this Court held that an opportunity of being heard for
correcting such mistake would not arise because there would not have been any
occasion to take one view or the other in the matter on the basis of
representation to be made by the affected employee.

It is
also not a case where a mistake was apparent on the face of the records and,
thus, compliance of the principles of natural justice would not have been made Bengal and Ors. (1995 (1) Cal. LT 462).

Requirements
to comply with the principles of natural justice would, therefore, vary from
case to case. if upon giving an opportunity of hearing to an affected employee,
it is possible to arrive at a different finding, the principles of natural
justice must be complied with. We may notice that recently in Union of India
opined:

"It
is now trite that if a mistake is committed in passing an administrative order,
the same may be rectified. Rectification of a mistake, however, may in a given
situation require compliance of the principles of natural justice. It is only
in a case where the mistake is apparent on the face of the records, a
rectification thereof is permissible without giving any hearing to the
aggrieved party."

(13)
We may, however, notice that whereas according to the respondent the difference
in the quantum of tax was as under:

1)
From 18-5-2001 to 25-5-2001 -Rs.16,724/-.

2)
From 26-5-2001 to 14-6-2001 is Rs.27,624/- (GCC increased due to enhancement of rates
of admission)

3)
From 15-6-2001 to 31-3-2001 is Rs.16,724/-(GCC restored to Rs.16,724/-because
the licensing authority refused to grant permission for enhancement); according
to the appellant the said difference would be: 1.GCC Rs.18,562.00 18-5-2001 to
25-5-2001 E.Tax Rs.89,840.00 2.GCC Rs.27,624.00 26.5.2001 to 14.6.2001 E.Tax
Rs.1,33,700.00 3.GCC Rs.18,562.00 15.6.2001 to 2.9.2001 E.Tax Rs.89,840.00
4.GCC Rs.19,549.00 3.9.2001 to 31.3.2002 E.Tax Rs.94,617.00

(14)
We are, therefore, of the opinion that the question in regard to the quantum of
difference may be determined by an appropriate authority after giving an
opportunity of hearing to the respondent. We, however, make it clear that the
respondent shall neither be liable to pay any interest on the said amount nor
shall not be exigible to any penalty . We also make it clear that computation
of the difference in the amount of tax shall be confined only to the matter of upgradation
of Municipality and no other.